Ex gratia payments in Ireland

It is anything your employer pays you on redundancy on top of the statutory minimum. Statutory redundancy is fixed by law at two weeks per year of service plus a bonus week, and pay is capped at 600 euro a week for that calculation. Anything above it is voluntary, which is what "ex gratia" means: as a favour, not as an obligation.

Yes in principle, and this is the part that catches people out. Statutory redundancy is completely free of income tax and USC. The ex gratia part is taxable income, but three separate reliefs can be set against it and you keep whichever leaves you with the most tax free.

Whichever is largest of three: the Basic Exemption of 10,160 euro plus 765 euro for each full year of service, the Increased Exemption which adds 10,000 euro to that if you qualify, or the Standard Capital Superannuation Benefit, which grows with your service and your salary. The calculator on this page works out all three.

The Standard Capital Superannuation Benefit. Take your average annual pay over your last 36 months, divide by 15, multiply by your full years of service, then subtract any tax free lump sum you have had or will get from your work pension. For long service on a good salary it is usually the largest of the three by a wide margin.

Only if you have not received a tax free lump sum in the last 10 years and you are not receiving a lump sum from your pension now or in the future. If a pension lump sum is coming, this relief is not open to you and the real choice is between the Basic Exemption and the SCSB.

Yes, and in two different ways. It rules out the Increased Exemption completely, and it is subtracted from the SCSB. In Revenue own worked example an SCSB of 38,000 euro drops to 27,000 euro once an 11,000 euro pension lump sum is taken off.

Yes. There is a 200,000 euro lifetime cap on tax free ex gratia termination payments. It applies across your whole working life rather than per job, so anything taken tax free in an earlier redundancy counts against it.

No. Statutory redundancy is exempt in its own right, from income tax and from USC, and it does not eat into the Basic Exemption, the Increased Exemption or the SCSB. Those apply to the ex gratia part only.

Then it is not ex gratia at all. Revenue is explicit that a lump sum paid under the terms of a contract of employment is taxable in full and does not qualify for exemption or relief. The reliefs here apply to genuinely voluntary payments.

For these reliefs, no. What matters is whether the money is above the statutory minimum and whether it is contractual, not whether you volunteered. Where volunteering can matter is with social welfare, so tell your Intreo Centre plainly that your departure was a redundancy.